In the intervening four years, Food Empire's earnings turned down, then turned bloody red, and then recovered.

This was in tandem with the plunge and and partial recovery of the price of oil, which affected key economies (and notably their currencies) where Food Empire operates.

In those years, Food Empire executed strategic initiatives which put it on a strong footing for recovery -- and, more importantly, lifted it to another level of recurring earnings:

♦ Food Empire reported US$29 million in pre-tax earnings for 2017.

♦ Operating cashflow in 2017 was US$29.9 million versus US$17.7 in 2016 (and US$24.4 million in 2012).

♦ Food Empire sat on cash of US$42.8 million at end-2017.

During the oil crisis years, Food Empire grappled with the effects of extreme currency weakness in its core markets of Russia, etc, but finally found its mojo in Vietnam, particularly. Sales there shot up with its Cafe Pho coffee.

3-in-1 coffee under the MacCoffee brand of Food Empire being packed. NextInsight file photoAnd it invested upstream for the first time -- which again effectively diversified its exposure to Russia, etc.

It built factories in Johor and India to produce raw materials (non-diary creamer and instant coffee) to feed its 3-in-1 coffee packaging plants in places like Russia.

In Johor also, Food Empire built a plant to produce potato chips for third parties as well as for its own brand, Kracks.

Photo: CompanyChin Tze Ting (far left) of Food Empire discussing FY17 results with analysts and investors last week. NextInsight photo.These upstream factories, happily, reached utilisation rates of around 80% in 2017. There is some upside left but not a whole lot of it.

This rapid rise in utilisation was due to the fact that Food Empire could either sell to third parties or use the products internally, which effectively de-risked the projects.

By using its self-produced instant coffee and non-dairy creamer for its 3-in-1 coffee products, Food Empire enjoyed cost savings.

Its gross margin rose from an already respectable 36.1% in 2016 to 38.3% in 2017.

With the experience from setting up and operating these plants, Food Empire plans to build another instant coffee plant, also in India.

The product would be freeze-dried coffee, which is of hgher premium than the spray-dried coffee it currently produces.

Food Empire

Share price: $0.69

Target: $1.00

Source: RHB Research

The new plant will cost US$50 million and is expected to start operations in 2020.

Until that spurt of growth kicks in, Food Empire's stability and momentum look set to continue.

There would be upside if the ruble strengthens further vis-a-vis the USD. The exchange rate now: 57 rubles to a USD compared to 32 rubles to a USD in 2012.

Food Empire, in its FY17 results statement, has completely written off its investment in South Korea's coffee chain, Caffe Bene, whose fate is now before the Korean courts.

Caffe Bene: Sweet life with a bitter end? NextInsight file photo.It boils down to Caffe Bene being either allowed to continue as a going concern (which then requires creditors to take haircuts) or liquidated.

If it's liquidated, it would be a bitter end to a brand that was enormously popular in Korea at its peak.

It would be doubly tragic because of its short life (it was founded in 2008), not an uncommon occurence that happens to people in South Korean serial dramas.

Meanwhile, Food Empire is well into its third decade, and sports a market cap of S$366 million (stock price: 69 cents).